Site Search Navigation

Site Navigation

Site Mobile Navigation

Supported by

Pandora Extends Its Reach to Businesses

By Ben Sisario November 1, 2011 1:29 pmNovember 1, 2011 1:29 pm

In six years, the Internet radio service Pandora has made its way to more than 100 million personal computers, cars and home entertainment systems. Now, in an effort to find new sources of income, it also is coming to shopping malls, doctor’s offices and restaurants.

On Tuesday, Pandora announced a deal for a commercial version of its service with DMX, a leading provider of background music at businesses. Terms of the deal were not disclosed, but with the new arrangement, stores of any size will be able to pipe in Pandora’s customizable streams of music for as little as $25 a month.

“The opportunity is now available for the first time to personalize and customize the music selection to really reflect the brand and atmosphere that a retail owner is driving for,” said Jessica Steel, the company’s executive vice president for business and corporate development. “That applies from coffee shops and dentists’ offices to restaurant chains and clothing retailers.”
Although little known outside the music and retail industries, the background music played in stores and restaurants is a large and lucrative business, by some measures representing $750 million a year in total revenue.

Because of copyright law, businesses must pay royalties to music publishers if music is played in a commercial context. Rather than deal with the agencies that typically collect these royalties, like Ascap and BMI, many companies subscribe to services like DMX, whose clients include Saks stores, and the McDonald’s and Applebee’s restaurant chains.

Pandora, which went public in June, has been under scrutiny from analysts who are looking for it to find new revenue streams to offset the high royalties it pays to record companies and music publishers. One of the company’s strategies has been to expand beyond personal computers and mobile phones into cars and other places; last week Pandora announced that its service would be integrated into some Lincoln models.

The commercial version of Pandora will not have advertising, but otherwise will have the same features as the consumer version, Ms. Steel said. It would operate through a device from DMX, which can be controlled in much the same way as Pandora on a computer, with an operator creating a custom music “station” by typing in a favorite artist and then fine-tuning the stream with thumbs-up, thumbs-down feedback.

In an interview, John Cullen, the chief executive of DMX, said that the customer feedback was essential to the product.

“One of the things we were scared to death about was that we would not get the little thumbs-up, thumbs-down remote control unit in time,” Mr. Cullen said. “When you’re in supply chain management, these are the things you worry about.”